A heavy sell-off in global equity markets

Thursday, October 09, 2014

European equity markets extended losses in today’s trading session, as investors remained cautious following the recent disappointing macroeconomic indicators from the US and Eurozone, while Draghi’s comments added further pressure to the markets. The CAC, IBEX and London equity benchmark retreated sharply between 0.6% and 0.8%, while the DAX bucked the downtrend and ended fairly unchanged.

ECB President Mario Draghi said today that “without reform, there can be no recovery” in Europe. German exports plunged sharply by 5.8% in August against expectations of a 4.0% decline, while imports retreated by 1.3% against analysts’ estimates of a 0.9% rise. The euro initially spiked to reach a high at 1.2791 today but erased earlier gains and slid lower towards 1.2690.


EURUSD Curncy (EUR-USD X-RATE)   2014-10-09 16-39-25 

Germany's exports quarterly chart

GRBTEXMM Index (Bundesbank Germa 2014-10-09 16-40-28

In the UK, the Bank of England kept interest rates unchanged at 0.5% in October, as widely expected. Sterling reversed earlier gains and declined towards 1.6130.

Furthermore, tepid US employment data continues to weigh on market sentiment. US initial jobless claims rose by 287,000 for the week ending 4th October versus Bloomberg analysts’ estimates of 295,000. At the time of writing, the Dow Jones declined sharply by more than 230 points (-1.3%), while Nasdaq and S&P 500 fell more than 0.95%.               

In London, telecoms and energy stocks dragged the market lower. Royal Dutch Shell, Tullow Oil, BP and BG Group plunged between 1% and 1.94% as WTI front month futures extended declines towards $86 per barrel following the recent bearish oil fundamentals.

WTI front month futures

CLX4 Comdty (WTI CRUDE FUTURE  N 2014-10-09 16-39-00

Vodafone and BT Group retreated 3.2% and 1%, respectively. Vodafone came under renewed pressure in today’s session amid concerns of increasing competition in the telecommunication sector. 

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